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I am preparing my pitch my business to some VCs and I've got a 30-slide PPT ready. I'm reading through the threads here and seeing that a business plan may or may not be necessary anymore. I don't have one at the moment but am thinking of starting the process and write one if someone asks to see it. What do others think of this strategy"

I raised $40m from top tier VCs 6 years ago and am now raising money again for another startup. While initially rusty, I quickly remembered how much of a game this is. Recently I spoke with 3 first time CEO who are raising money for the first time. Here are my 2 cents on a few items. I'm interested in others thoughts.

1. DO NOT leave or email your presentation. you are only educating them on your category (not your job) and informing your competitors. As CEO of a VC funded firm, I always was emailed the presentation of any competitor. IF they insist on seeing presentation before mtg, then they are not interested. All the top guys know this and thus take notes during the meeting. IF they are not taking notes during your meeting and still ask for prez, then they are not interested. DO send them some material to spark interest - founding team resume, paragraph overview, perhaps article about customer pain.

2. First 10 minutes are most critical. Yes, its very hard to get meeting, but once you have meeting, you need to QUALIFY and CONNECT with the partner in the first 10 minutes. Qualify by finding out how much they know about category and space. Connect with him or her personally (without .ppt on). Resist natural inclination to firehouse .ppt since you only now have 45 minutes. The ONLY purpose of the first meeting is to establish interest to have a follow on meeting. If they don't see enough promise in your team and market opportunity, then they will not fund deal and you need to move on.

3. Beware the "Head fake" to learn. "Yes, yes, this is VERY exciting. We want to do this deal." You get excited, send them your research and customer contacts, and they now have learned everything you learned on your dime. Deal excitement then dies. Instead, given them 1-2 very specific items of homework (perhaps contacts for you on due diligence, MAYBE 1 customer contact late in the process). Be constantly giving them homework and watch their _actions_ and not words.

4. Do not serialize pitches. Schedule as much presentations during same 2-3 weeks to generate excitement and interested. The #1 thing to get these guys to move or to pass is another firm putting down term sheet down or seriously looking at deal.

5. Don't forget - 90% will never say no. Pitch, given them homework, then move on. If they are interested, they will find you. It's in their financial best interest to keep as many deals open as possible (yes, this is incredibly frustrating for CEOs but it's the way it is).

6. Keep raising money until money is WIRED. Plenty of deals going south (yes even at top tier firms) before money is wired. Smile, but only believe money being wired.

Posted by
Mr. Smith
on 2008-10-27

Having done over 150 investor pitches across five companies, a concise and well-organized deck is critical to success. No deck will be "perfect," but here is what I learned.

First, the deck should evolve as you meet with investors and evaluate their reaction to each slide, so use version numbers with the file to avoid confusion when sending the deck around. Next, avoid revealing confidential information, such as pending business deals or secret release features. Finally, make sure that each slide is very concise, using one line of text per bullet and no more than six bullets per slide. If possible, use graphics or a chart instead of text.

The whole deck should take 20 to 30 minutes to get through without questions, assuming that half of the meeting will be questions. The ten slides that you need, in my experience, are:

1. Vision: What are you trying to do, and why are you doing it"

2. Market: What is the market you are addressing and the estimated value of this market over the next 5 to 10 years"

3. Team: Who are the key three to five executives (Vision, Operations, Tech, Sales, Marketing), and what are their specific qualifications in the target market"

4. Offering: What is your exact offering" If possible, present a three to five minute pre-recorded video demonstration.

5. Roadmap: Where are you in your offering release cycle and with respect to gaining traction"

6. Deals: What are your major partnerships, relationships, etc." This slide should include various logos.

7. Differentiation: How are you different from your three main competitors" This slide should have a simple table.

8. Stats: What are the basic statistics of your company (Round, Investors, Employees, Location)"

9. Financials: What is your high-level projected P&L for the next two years plus the current and previous year, if available"

10. Capital: How much capital are you raising and what will it be used for"

This type of simple presentation has always worked for me. Please add any other ideas or lessons that have worked for you.

I'm currently creating a prototype that will run on specialized hardware, but I am unsure of the lengths required for a prototype.

What's more important: the software or the hardware and the software"

I plan on pitching angel investors in the Valley and I was curious if you guys had any advice on what they'd prefer to see" I can have the hardware built but I realized that it would cost much less if we used a generic computer for now, so I was curious about the advantages of using the specific hardware for the prototype.

We are close to completing our business plan, and are thinking ahead to the next step: document production.

What do VCs prefer with respect to the final look and feel of a document" Do they want something glossy and flashy; off-set printed with perfect binding; designed to look like a high-end magazine" Do they prefer a plain report printed on regular white paper, coil-bound, with a clear plastic cover"

Will a document that looks like it cost more to produce get VCs to open it with more interest than one that looks like it was printed on a home office ink-jet" Or do VCs only care about the facts and figures"

Posted by
Mr. Smith
on 2008-03-06

You have been slaving away at a fundraise, and now you have an introduction to a top fund. Pow! You pop open Outlook and copy and paste your three page introduction email meets business plan synopsis. Guess what" Bad idea. Almost every entrepreneur, including myself, has overdone the initial introduction email. Your mission is to sell them on the opportunity, not to close a deal with the Death Star of pitch emails. Let's walk through the anatomy of a good introductory email.

Starting at the top, the email title should be clear, including key data points on stage, industry, and need. For example: "Early Stage Biotech Opportunity" or "Follow-on Investor Needed for Cleantech Expansion Round." If you have a well-known company, then say "TechCrunch Looking for small Series A."

Blanket spam-pitches are insulting, so the email itself should open with some personal context based on doing your homework. For example: "I see you are on the Board of VentureBeat, and I would like you to look at my TechCrunch opportunity" or "Roger has said that you are the right person for us to speak with about cleantech."

Next is where every entrepreneur makes a series of classic mistakes. A compilation of overwhelming market data, jargon, and bullet points normally follows the impersonal introduction, accompanied by a slew of useless attachments, login information, etc. Do you think that VCs actually read all of this stuff" Your goal here is to say as little as possible and get this person on the phone.

Your best case scenario is to boil down personal background, market need, market size, and funding requirements into an easy to read paragraph (even a sentence, if possible). For example, "After selling my last company Google, I patented a process to generate electricity from highways. An initial field study demonstrated that the 405 through LA can supply electricity to 400,000 homes, generating $40 MM in revenues. We are looking to raise a $5 MM Series A to deploy a larger technology trial to supply electricity for 10,000 homes before we enter full-scale production across the United States."

Close your email with a couple of opportunities to speak, and be specific. For example, "We are planning to start meeting with investors next week, and I have availabilities on Tuesday and Thursday afternoon. I will also be down by your offices on Friday. You can reach me on my cell to set something up." Never delegate scheduling to your assistant, especially when fundraising.

Do any other Members have some good tips for an introductory email to post below"

Posted by
MedTech Expert
on 2008-02-27

Part of the science of getting in the door of a VC is to stand out from the crowd. Unfortunately, inertia is often a big factor in business plan screening. Contrary to popular opinion, every word of every plan is not read. First the plan gets a glance. Then it gets a skim. Then it gets a more detailed read. But every step is contingent upon the reader finding a reason to go the next one.

Here's the truth: most investors screen out rather than screen in. Especially if they're overwhelmed and very time constrained as most are.

This means:
• if your business overview looks like it needs to be deciphered - you're out
• if they don't see what they are looking for in a glance - you're out
• if they don't have all the information they need to know -you're iffy

Eliminate objections and pessimism before it arises by explaining in a very well thought-out cover letter what makes your business different - and position it as one that's advantageous to the firm's objectives, if you can.

Your business overview is a screening tool. It's the point person on your investor search. It needs to screen you in, and it needs to do that by being read, not ignored. If you want to get in the door, this is one of the keys that can open it.

An online pitch and diligence room can save you a lot of headaches and time by getting ready up front... As a general rule of thumb, it is best to pitch as many venture firms in as little time as possible, and then aggressively follow-up with the best leads. Once you have interest, you need to get information out quickly. Here are some pointers for generating interest and syndicating materials by leveraging online resources:

>>>> Develop an Online Pitch Room: Polish your pitch materials and put them in a customized web site for download (the non-confidential materials, that is). The site can be very simple (one page), but it needs to have your branding. Also ensure that everything is password protected and that anyone who views the materials is tracked. Track each login and each document downloaded. If possible, add a screencast or video pitch to better sell your offering.
>>>> Invite Target VCs: Research 25 to 75 appropriate venture capitalists and invite them through a two paragraph email to speak with you, including a link to the Pitch Room in your email. Invite one partner per fund, and try to have some type of reference, such as an introduction by another CEO. Anyone that you invite should be given a custom username and password for tracking purposes.
>>>> Follow-up on the Results: Keep a careful eye on the activity over the next two to three weeks, and call the partners that have downloaded the files and logged in to the site. Wait to call until at least three days until after the files were downloaded. Write off funds that have not engaged. Take a lack of follow-up as a sign to avoid.
>>>> Develop a Diligence Room: Make sure that all of your key corporate documents, financials, budgets, resumes, contracts, etc. are all in a digital format (PDF") and online in a secure location. This could be a SharePoint server, for example. Once you have interest from a VC, they will quickly want to dive into the diligence, and you need to be ready. Like with the Pitch Room, make sure that you track all activity in the Diligence Room by individual VC.

Of course, nothing ever works out exactly as planned, but you will never lose by being prepared and one step ahead. Inevitably, you will need to face-to-face pitches and compile a ton of custom diligence. However, being ready up front will save you a ton of downstream hassles. Do other Members agree" What other experiences have Members had with online pitching and diligence solutions"